Asia Pacific Economic Forecast : Monthly Report(JP)

APIR provides weekly and monthly assessments of current economic conditions and future outlooks for the United States and Japan. We also provide detailed quarterly predictions for the economies of Kansai and Japan.

Asia Pacific Economic Forecast

ABSTRACT

Forecasts updates▶ Our latest expenditure-side forecast for Japan’s real GDP growth in 2020 Q2 is an annualized -14.6% QoQ. Our production-side forecast is an annualized -7.4% QoQ. The average of the two is an annualized -11.0%.▶ Our forecasts for the private final consumption expenditure deflator and the domestic demand deflator in 2020 Q1 are both -0.3% QoQ. However, as the terms of trade are improving, we forecast an overall GDP deflator of +0.7% QoQ.

Asia Pacific Economic Forecast

ABSTRACT

Forecasts updates▶ Our latest expenditure-side forecast for Japan’s real GDP growth in 2020 Q1is an annualized -2.7%. Our production-side forecast is an annualized +0.3%. The average of the two forecasts is an annualized -1.2%.▶ Our forecasts for the private final consumption expenditure deflator and the domestic demand deflator in 2020 Q1 are both +0.1% QoQ. As the terms of trade are deteriorating, we forecast an overall GDP deflator of 0.0% QoQ.

Asia Pacific Economic Forecast

ABSTRACT

Data updates

▶ Although production increased for the third consecutive month in February, its recovery from the October-November slump has been sluggish.▶ Spending on goods (40% of total private final consumption expenditure) increased in February. However, statistics on spending on services, which have more weight and might have been affected substantially by Covid-19, have not been released yet, making it hard to draw conclusions on private consumption trends.▶ Private housing, private capital investment and changes in private inventories were all bearish in 2020 Q1.▶ February imports were hit particularly hard by Covid-19. That caused an abrupt expansion in net exports, which propped up GDP growth. However, as the global economy entered a synchronized slowdown in March, we expect that exports will decline, which will worsen the trade balance.

Asia Pacific Economic Forecast

ABSTRACT

Data updates▶ Most major economic indicators deteriorated in January, including residential construction, capital goods shipments, private capital investment, exports, imports, and large retailers’ sales. Inventories piled up as industrial production increased slightly. The recovery in production, however, has been slow since the consumption tax hike last October.

Asia Pacific Economic Forecast

ABSTRACT

Data updates▶ The Q3 index of industrial production declined for the first time in two quarters.▶ Rush demand before the consumption tax hike is evident in September data on retail sales, which saw robust growth.▶ Both planned residential construction expenditure and capital goods shipments increased in Q3.▶ Q3 real net exports expanded.

Forecasts▶ Our forecast for Q3 real GDP growth is an annualized +0.9%. This forecast is likely to be revised upwards once September data on private final consumption is released.▶ We forecast an overall GDP deflator of +0.2% QoQ in Q3.

Asia Pacific Economic Forecast

ABSTRACT

Data updates▶ The index of industrial production in August declined for the first time in two months (-1.2% MoM).▶ Rush demand before the consumption tax hike this year seems limited compared to the previous tax hike in 2014.▶ Both planned residential construction expenditure and capital goods shipments increased in July-August.▶ Real net exports expanded.

Forecasts▶ We forecast real GDP growth (expenditure side) of +0.6% QoQ in Q3, or +1.4% if annualized. The production-side forecast is an annualized +2.6%. The average of the two forecasts is an annualized +2.0%.▶ We expect that the reactionary fall after the tax hike this year will be milder than it was five years ago.▶ We forecast an overall GDP deflator of +0.1% QoQ in Q3.

Asia Pacific Economic Forecast

ABSTRACT

Data updates▶ Q2 real GDP grew an annualized +1.8% QoQ, expanding for the third consecutive quarter.▶ The consumption goods production index in July fell -0.3% compared to the Q2 average. In contrast, the capital goods production index in July increased +2.0% compared to the Q2 average.▶ Compared to the Q2 average, real exports and real imports in July grew +2.1% and +1.1%, respectively. As a result, net exports expanded.▶ The national Consumer Price Index (CPI) in July increased +0.6%YoY, expanding for the 31st consecutive month.

Asia Pacific Economic Forecast

ABSTRACT

▶ We forecast a real annualized GDP growth of +1.5% in Q2 (expenditure side). The production-side forecast is an annualized +2.1%.

▶ Q2 GDP growth was mainly driven by domestic demand, while net exports are expected to have made a negative contribution.

▶ The latest official figures suggest a robust increase in production, consumption and capital investment in Q2. However, this might be temporary, as the forecasts from the past month suggest a growth deceleration trend.

▶ Q2 CPI inflation is expected to have decelerated to a modest +0.1% QoQ. We forecast an overall GDP deflator of -0.1% QoQ.

Asia Pacific Economic Forecast

ABSTRACT

▶ Despite the small upward revision in Q1real GDP official estimates, there are reasons for concern as the demand-side GDP components all declined QoQ. Growth was mainly driven by the expansion in private inventory changes and shrinking imports.

▶ Contrary to our expectations of an economic recoil following the long holidays, May data showed a robust increase in production. However, this might be temporary.

▶ Regarding Q2, we forecast a real annualized GDP growth of +0.2% (expenditure side). The production-side forecast is an annualized +0.6%. The forecasts from the past month suggest a growth deceleration trend.

Asia Pacific Economic Forecast

ABSTRACT

▶ Although real GDP in Q1 expanded for the second consecutive quarter, there are reasons for concern as the demand-side GDP components declined QoQ. Growth was mainly driven by the expansion in private inventory changes and declining imports.

▶ For Q2, we forecast real annualized GDP growth of +0.9% (expenditure side). The production-side forecast is an annualized +1.2%. The forecasts from the past three weeks, however, suggest a negative trend. We forecast a GDP deflator of -0.0% QoQ in Q2.